The Risks of Money Printing & 'Excess Reserves'

The first is that the recipients of all this thin-air money could just sit on it and do nothing. No loans would be made, which means no new deposits would be made, which means the 'miracle' of fractional reserve money multiplication would not happen, which means the economy would not get juiced.

Indeed, that's exactly what has happened. We can detect this in the form of what are called 'excess reserves,' which are dollars that banks now hold that are in excess of what they need to have on hand to satisfy reserve requirements.

There must be a lot of disappointment at the Fed that all of these funds are just piling up there and not doing anything (yet) to supercharge the economy, and so you might wonder why the Fed persists in 'quadrupling down' on a strategy that is not working as intended.

Unfortunately, I don't have a satisfying answer for that, as it mystifies me, too. The only thing that makes sense is that the Fed is essentially just gunning for higher stock and bond prices in the hopes that asset inflation will bolster confidence and insulate large financial institutions from potential losses.